“However, this will not affect Penang property prices, which will remain stable,” he noted.

Source: NAPIC Malaysian House Price Index

“Logically, with the current property market situation, property prices will never come down due to the higher cost.”

Notably, land prices have skyrocketed in prime locations during the last five years along with prices of raw materials such as steel and sand, said Chan.

“There is also no property bubble, as there had been no large supply of properties coming into the north over the past five years.”

“There hasn’t been any irresponsible lendings either.”

Speaking at Rehda’s annual press conference on the property market outlook for 2014, Chan also noted that the government had played a role in increasing land prices.

“For example, when the state government compensates Beijing Urban Construction Group (BUCG) for the cost of building the proposed RM6.3 billion undersea tunnel project in Tanjung Tokong with a 110-acre land, the state government has indirectly influenced the price of land in the area.”

“The value of the 110-acre site is about RM1,200 per sq ft, when divided by the value of the project…This automatically sets a new benchmark for the price of land in Tanjung Tokong, Tanjung Bungah and other prime locations on the island,” he explained.

To date, land prices in Tanjung Tokong, Tanjung Bungah and prime locations in the northeast district stand at between RM500 and RM1,000 psf.

Over in the southwest district, land prices start from RM120 psf onwards.

Chan added that “first home buyers or people who buy affordable houses are the ones that will be affected by the recent Budget 2014 due to the higher interest rate they need to bear”.

With this, he urged the government to extend “some kind of help for first-time buyers”.

Source – PG

Food for thought: It is important to explore fundamentals when it comes to any real estate investment. One needs to look at whether the economy is having a steady growth, transformation and the demand of the properties. One should not react to market changes by going the extreme. A good way is to analyse the Housing Price INdex as attached and see if the current market situation is congruent to the chart. Invest in your Financial Education to be able to make sound decisions on your investment all the time.

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